RENO, Nev., May 7 /PRNewswire/ -- Reno Air, Inc. (Nasdaq: RENO)
(PCX: RNO), today reported that in the first quarter of 1998 it had a net loss
of $7.1 million, or $0.67 per share of common stock (basic and diluted),
compared to a loss of $5.0 million, or $0.48 per common share, for the same
quarter last year. The loss in 1998, is before restructuring charges.
Reno Air Chairman, President and CEO Joe O'Gorman stated, "Coming out of a
poor fourth quarter in 1997, there was not enough time to fix the revenue and
cost issues that continued through the first quarter of 1998. Specifically,
some maintenance issues remained and there was some heavily discounted revenue
that continued into the first quarter of 1998. These items are now cleaned up
and processes have been put in place to preclude their reoccurrence.
"During March and April, the schedule was realigned closing four cities,
reducing the fleet and reallocating resources. This optimized schedule
increases frequencies in key markets, raises aircraft utilization, and along
with improved yield management will enhance revenue during the remainder of
1998. In addition, significant emphasis has been placed on reducing costs,
including eliminating 15 percent of the workforce and continuing a complete
review of all expenditures.
"Although the impact of these actions won't be seen until the middle of
the second quarter and through the beginning of the third quarter, the company
remains on a solid footing and performance improvement is being seen. With a
new, experienced management team in place, we are confident Reno Air's
shareholders will see improved results and we expect to show a profit for the
full year."
In connection with the workforce reduction and other related actions, the
Company incurred restructuring charges of $2.1 million, of which approximately
$1.5 million was recorded in the first quarter. The balance of the
restructuring charges will be recognized in the second quarter of 1998.
After the restructuring charge, the Company reported a net loss applicable
to common stock of $8.6 million in the first quarter of 1998, or $0.81 per
common share on both a basic and diluted basis.
Operating Revenues
Operating revenues increased 4.6 percent to $93.8 million during the first
quarter of 1998 compared to $89.7 million during the first quarter of 1997.
This increase was driven primarily by a 6.8 percent increase in revenue
passenger miles to 772 million compared to 723 million revenue passenger miles
in the first quarter of 1997. The 1998 increase in operating revenues was
depressed somewhat by a 1.3 percent decrease in yield to 11.52 cents.
The first quarter 1998 load factor was 64.6 percent, a slight decrease of
0.1 points from the first quarter of 1997.
Operating Expenses
Operating expenses increased by $6.8 million in the first quarter of 1998
compared to the 1997 period, such increase resulting primarily from higher
payroll and aircraft maintenance expenses and by the $1.5 million
restructuring charge. Despite the increase in operating expenses, operating
costs per available seat mile remained at 8.4 cents for the first quarter of
1998 resulting principally from a 6.9 percent increase in available seat miles
compared to the 1997 period.
In the first quarter of 1998, the Company changed its estimate of the
depreciable lives of the Company's owned and Stage III compliance aircraft,
spare engines and related aircraft components to approximately 25 years which
had the effect of decreasing depreciation expense by $1.2 million in the
quarter. This change in the depreciable lives is more representative of the
estimated useful lives for this flight equipment than those shorter
depreciable lives used previously by the Company.
Reno Air, Inc.
Statements of Operations
For the Three Months Ended March 31, 1998 and 1997
(in thousands, except for share data)
Three months ended
March 31,
1998 1997
(unaudited)
Operating revenues:
Passenger revenues $88,919 $84,295
Other 4,907 5,389
Total operating revenues 93,826 89,684
Operating expenses:
Salaries, wages and benefits 18,081 15,323
Aircraft fuel and oil 14,838 18,078
Aircraft leases 17,628 16,603
Aircraft maintenance 11,283 7,580
Handling, landing and airport fees 10,642 9,378
Advertising, marketing and sales 6,593 7,465
Commissions 4,044 4,900
Facility leases 4,000 3,090
Insurance 1,409 1,833
Communications 1,696 1,298
Depreciation 1,868 2,218
Restructuring charges 1,487 -
Other 7,091 6,090
Total operating expenses 100,660 93,856
Operating loss (6,834) (4,172)
Nonoperating income (expense):
Interest expense (1,508) (1,268)
Interest income 838 488
Other (281) (45)
Nonoperating income (expense), net (951) (825)
Loss before income tax provision
and preferred stock dividends (7,785) (4,997)
Income tax (expense) benefit -- --
Net loss before preferred stock dividends (7,785) (4,997)
Preferred stock dividends 807 -
Net loss applicable to common stock $(8,592) $(4,997)
Loss per common share and
potential common share:
Basic $(0.81) $(0.48)
Diluted $(0.81) $(0.48)
Weighted average common shares and
potential common shares outstanding:
Basic 10,560,111 10,370,907
Diluted 10,560,111 10,370,907
Selected operating statistics:
Revenue passenger miles (in thousands) 771,635 722,618
Available seat miles (ASMs, in thousands) 1,194,315 1,116,810
Load factor (percent) 64.6 64.7
Passengers enplaned 1,337,892 1,272,875
Yield (cents) 11.5 11.7
Revenue per ASM (cents):
Passenger 7.4 7.5
Total operating revenues 7.9 8.0
Operating cost per ASM (cents) 8.4 8.4
Breakeven load factor after preferred
stock dividends (percent) 70.9 68.5
Weighted average number of aircraft
during the period (a) 29 29
Average daily aircraft
utilization (revenue block hours) 10.4 9.5
Average fuel cost per gallon (cents) (b) 64.5 85.0
(a) excludes one aircraft on lease to another company.
(b) excludes into-plane and similar fees.
SOURCE Reno Air, Inc.
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Related links:
http://www.renoair.com
Company News On-Call: http://www.prnewswire.com or
fax, 800-758-5804, ext. 740075
CONTACT:
Connie Huff, Reno Air Corporate
Communications, 702-954-5000, ext. 4326, or evening/weekend,
888-396-0817
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